UK house price balance falls to near two-year low

The UK Residential Market Survey from RICS showed the house price balance dropped to -19% in August 2025, the weakest reading in almost two years, following -13% in July and -7% in June.

The sharp deterioration underscores the mounting pressure on house prices amid subdued new buyer demand, with affordability constraints, higher mortgage rates through much of the past year, and lingering economic uncertainty weighing on activity.

Regionally, the downturn was uneven. East Anglia and the South West saw the steepest declines, with net balances at -64% and -46% respectively, both significantly weaker than July and far below the national average.

Respondents pointed to weaker buyer appetite, rising inventories, and protracted transaction times in these areas. By contrast, Northern Ireland remained an outlier, with survey participants continuing to report solid price growth, highlighting resilience in pockets of the market less exposed to affordability pressures.

Forward-looking indicators also softened. Respondents expect prices to edge lower over the next three months, with a net balance of -20% for August pointing to near-term declines. Over a 12-month horizon, contributors still foresee modest gains, but the latest +9% reading marked the weakest expectation since December 2023, suggesting confidence in the longer-term outlook is faltering.

Activity indicators corroborated the subdued tone: new buyer enquiries remained weak, agreed sales volumes continued to edge down, and listings rose slightly, contributing to a more buyer-friendly market. Lettings trends diverged, with rental demand holding firm as stretched affordability pushed more households to remain in the rental sector.

Taken together, the survey results reflect a housing market under strain, with short-term downside risks outweighing near-term upside. The outlook will likely hinge on the pace of monetary policy easing by the Bank of England, the evolution of real wages, and any fiscal measures introduced to support housing demand.